“In a world where social security and corporate pensions appear to be in an inevitable slide toward obsolesce, the key is disciplined and intelligent retirement planning. Retirement planning is as simple as creating a plan and sticking to it, through markets ups, downs, depressions, recessions, and anything else an uncertain world can throw at you. An initial evaluation is offered to begin the process of helping build your net worth and plan for your financial future.”
Investing can be such a confusing, scary proposition sometimes. You’re never really sure if the information you find is exactly right for you (in the case of some online publications), if the data is relevant (in certain financial studies) or if the advice is credible (such as when you receive a stock tip from your Uncle Fred because “he knows a guy”).
Although we can’t help you avoid a bad recommendation from a relative, we can at least give you some steps to take that are a bit more tailored to you. As part four in our series, “A Wealth Building Plan for You,” we’ll address the needs of those ready to retire.
Where to start. You’ve decided that you’re going to retire soon. Congratulations. Now what do you do? Retirement planning presents with it an array of questions that don’t usually have right or wrong answers. Much of your decision-making is going to be based on both what you have already saved and your personal preferences.
It’s important to remember though, that although you’re not going to be working as much, your money does not have the same luxury. In fact, in some ways, your wealth needs to work harder than ever, since you won’t have an income stream like you did during your peak earning years. With that, here are some questions to consider as you get ready for some of the best years of your life.
How much income will you need? We’re seeing more Americans live well into their 80s, 90s and even longer. That means if you plan on retiring at 65, you’ll have 20 to 30 years of expenses to consider, if not longer. A general rule of thumb is that you’ll want to aim to have 70 to 80 percent of your current income in retirement. In January 2014, Fidelity Investments estimated that to get there, you’ll need retirement savings totaling at least eight times your ending salary. How much will you need to save? The answer to this question depends a lot on factors you have some control over.
Do you plan on spending more, less or the same as what you’re currently spending? Does a vacation look more like a visit to Orlando or an excursion to Bali? Will going out to dinner consist of steak and lobster or burgers and fries? Even if you’re no longer paying for a home or a child’s college education, your expenses could remain the same, or even increase, if you’re planning on taking dream vacations and traveling more.